Vic hospitals wear scars of federal cuts

Some casualties of funding cuts in Victoria's hospital system won't be brought back to life by the federal government's $107 million backflip.

Premier Ted Baillieu has urged the commonwealth to restore the remaining $368 million it cut from the state's health budget based on revised population figures.

Casey Hospital emergency department staff were delighted on Thursday by news that their unit could now continue to operate at night.

But the 50 jobs lost at the Royal Children's Hospital will not be saved, despite the reinstatement of $3.6 million in federal funding at the hospital.

Half the job losses came from not filling existing vacancies, and 12 people were told their positions no longer existed. Chief executive Christine Kilpatrick said on Thursday the positions wouldn't be renewed.

The federal government argues Victorian hospitals are under stress largely because the state government has ripped $616 million out of health.

But several Victorian hospital bosses have blamed the federal government for the elective surgery cuts and bed closures.

The federal government will now bypass the state and hand $107 million directly to the state's hospital administrators.

A beaming federal Health Minister Tanya Plibersek told Casey Hospital doctors and nurses she understood the cutbacks had been stressful.

"I know that it has been a terrible time for you and that you have been concerned about your patients and concerned about your own jobs," she said.

Southern Health professor of emergency medicine George Braitberg said the reinstatement of $13.5 million at that health service meant elective surgery could resume.

"We want to get on with our job of just treating patients," he said.

Australian Healthcare and Hospitals Association chief executive Prue Power said it would be time-consuming to reorganise cancelled elective surgeries and reopen beds.

"It's a major operation," she said.

Ms Plibersek said commonwealth funding for Victorian hospitals would increase by $900 million over the next four years.

She said she may again be forced to bypass the state government and let hospital administrators manage the money instead.

"It is to my mind an extraordinary circumstance here in Victoria, but if state governments are going to play politics with the health and safety of patients, then there will be times when I need to step in."

Victorian Health Minister David Davis said the commonwealth was stuck in the "twilight zone".

He said bypassing the states with hospital funding undermined the national health agreement.

"The federal government is now seeking to avoid paying money through the (national funding) pool," Mr Davis said.

"The idea that you would govern everything from Canberra ... that some bureaucrats in Canberra would be making decisions about our hospitals is something that I don't think Victorians would welcome."

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